Food prices could reach 2008 level: USDA
By Christopher Doering
WASHINGTON (Reuters) - U.S. consumers could see food costs spiking to levels seen during the food crisis of 2008 as higher commodity and energy prices force companies to raise prices on products lining grocery store shelves, the Agriculture Department said on Thursday.
Food prices are forecast to rise a sharp 3.5 percent this year -- nearly double the overall inflation rate. The lion's share of the increase is expected in the second half of 2011 when the recent uptick for commodities, such as corn and soybeans, makes its way through the food system. Just last month, USDA forecast an increase of 2.5 percent in 2011.
Food prices soared to 4 percent in 2007 and rose to 5.5 percent a year later -- the biggest increase since 1990 -- as stockpiles ran low around the world.
Volatile agriculture and energy prices could help food prices challenge those levels in 2011, said USDA economist Ephraim Leibtag at the department's annual Outlook Forum.
"Given that it's still earlier in the year, I'm prone to be conservative on the side of the forecast," said Leibtag. "It's a possibility. I wouldn't be shocked but I'm not predicting it now."
FOOD INFLATION COULD LEAD TO RIOTS
Global food inflation, the result of growing demand for food and tight commodity supplies following catastrophic storms and droughts in leading agriculture producers such as Russia and Australia, is a growing worry for world leaders.
World Bank chief Robert Zoellick said last week global food prices have reached "dangerous levels," and warned they could complicate fragile political and social conditions in the Middle East and Central Asia. Continued...